Work Opportunity Tax Credit Extended

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The VOW to Hire Heroes Act of 2011 had previously made changes to the Work Opportunity Tax Credit (WOTC), including adding new categories to the qualified veterans targeted group and expanding the WOTC to make a reduced credit available to tax-exempt organizations hiring qualified veterans. The VOW Act had also extended the WOTC for qualified veterans hired before January 1, 2013.  The American Taxpayer Relief Act of 2012 (ATRA) then extended the Work Opportunity Tax Credit (WOTC) for hiring certain workers including qualified veterans through December 31, 2013.

Pre-screening and Certification Requirements

All employers must obtain certification that an individual is a member of a targeted group, before the employer may claim the WOTC. The process for certifying the veterans for this credit is the same for all employers. To obtain certification, employers must file Form 8850.

Normally, an eligible employer must file Form 8850 with their respective state workforce agency within 28 days after the eligible worker begins work. However, the IRS has provided special transition rules for the recent law changes.

Under the special transition rules, an employer who hires a member of a targeted group, other than a qualified veteran, after December 31, 2011, and on or before March 31, 2013, will be considered to have timely filed Form 8850 if it submits the completed form to the respective state workforce agency by April 29, 2013.  An employer who hires a veteran after December 31, 2012, and on or before March 31, 2013, will be considered to have timely filed Form 8850 if it submits the completed form to the respective state workforce agency by April 29, 2013. The 28-day rule will only be applicable after that date.

Claiming the Credit - Taxable Employers

For taxable employers, the WOTC may be claimed for hiring targeted group members, including qualified veterans, who begin work before January 1, 2014.  After the required certification is secured, taxable employers claim the tax credit as a general business credit against their income tax.

Claiming the Credit - Tax-exempt Employers

Qualified tax-exempt organizations may claim the credit for qualified veterans who begin work on or after November 22, 2011, and before January 1, 2014. Tax-exempt employers may not claim the WOTC for other targeted group members.  After the required certification is secured, tax-exempt employers claim the credit against the employer social security tax by separately filing Form 5884-C.  The Form 5884-C is filed after filing the related employment tax return for the employment tax period for which the credit is claimed. It is recommended that qualified tax-exempt employers not reduce their required deposits in anticipation of any credit as the forms are processed separately.

If you are interested in taking advantage of the WOTC, you should talk to your tax professional.  If you have any questions about how to take advantage of the WOTC as amended by the VOW Act or ATRA, please contact me at 937-223-1130 or Jsenney@pselaw.com.

AND ONE MORE THING.   The mandate for large employers to provide health insurance to their full time employees, or face penalties, has been deferred to 2015.  Employees however are still required to obtain and carrying health insurance, or face penalties, starting in 2014.  The delay in implementing the employer mandate will likely cause more people to enroll in the subsidized insurance exchanges.  Each year, going forward as fewer and fewer employers offer health coverage and/or restructure their work force (part time versus full time workers), more and more individuals will likely move to the exchanges.

Small businesses with fewer than 50 employees are not subject to the mandate.  So some employers are looking at restructuring their work force as a way around the new law.  For this purpose, the law defines full time employees as those that work on average 30 or more hours per week.  To avoid the mandate, some businesses have been hiring fewer full time workers, hiring more part-time workers, and/or cutting employees' hours to less than 30 per week.  If you would like to know more about the employer mandate, contact one of our employment law attorneys at 937-223-1130 or Jsenney@pselaw.com.

Facebook Firings Revisited

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The National Labor Relations Board often takes a pro-labor stance when deciding cases brought before it.  In a number of cases where the Employer terminated an employee for posting disparaging comments about the Employer or the workplace on Facebook or another internet site, the NLRB ordered the Employer to reinstate the employee.  The NLRB found in these cases that the posted messages were protected "concerted activity" and that the employee's termination was an unfair labor practice.  However, in a recent case Tasker Healthcare Group dba Skin-Smart Dermatology, the NLRB Associate Counsel sent an Advice Memorandum to the Regional Director supporting the termination of an employee by a medical practice where the employee had vented about her workplace in a private group message sent via Facebook.

In Tasker, the employee and 9 others participated in a group message in which only invited individuals could participate.  The message initially focused on a planned social event.  But the employee later in the string of messages told the others about an exchange between the employee and her supervisor.  In this string of messages the employee told the others that she had told the supervisor to "back the freak off", that the Employer was "full of sh___", that the employee would not "bite my tongue any longer",  and that the supervisor should "FIRE ME . . . and make my day".   Eventually one of the other individuals posted that the workplace was "annoying as hell" and that "there was always some dumb sh__ going on."

On the next day, one of the individuals who had participated in the message string showed it to the Employer.  The Employer then fired the employee in question.  The Employer told the employee it was obvious from the message string that the employee was not interested in continued employment with the medical practice, and that the Employer was concerned about having the employee work directly with patients given the employee's feelings about the medical practice.

The employee filed a claim against the Employer with the NLRB alleging an unfair labor practice.  The NLRB Regional Director asked for advice from the Associate Counsel. The Associate Counsel acknowledged that the NLRB generally protects individuals who engage in concerted activity.  However, the Associate Counsel found that the employee had only been expressing an individual gripe and had not been engaging in a discussion of shared employment concerns.  The Associate Counsel found further that the employee's Facebook comments were nothing more than personal contempt for the Employer and in no way could be characterized as a discussion of the terms and conditions of group employment.  As a result, the Associate Counsel determined that the employee's termination was not unlawful.

If you have any questions or need assistance in any matter involving employee hiring, discipline or firing, please give one of our employment attorneys a call at 937-223-1130 or Jsenney@pselaw.com.

AND ONE MORE THING.  The EEOC settled its first lawsuit alleging discrimination under the Genetic Information Non-Discrimination Act (GINA).  The lawsuit was brought by the EEOC on behalf of a temporary worker.  When the worker's temporary assignment came to an end, the worker applied for permanent employment.  The employer made the worker an offer and then sent the worker to its contract medical examiner for a pre-employment drug test and physical.  The worker was required to complete a questionaire which inquired about the existence of heart disease, hyper-tension, cancer, diabetes, arthritis and other physical and mental disorders in her family medical history.  Following the employee's examination, the employer rescinded its employment offer.  GINA prohibits employers from discriminating based on genetic information and restricts employers from requesting, requiring or purchasing such information.  In this case, the EEOC determined that the employer violated federal law when it requested the worker's family medical information through a contract medical examiner.  If you have any questions about GINA or other employment law matters, please contact one of our employment attorneys at 937-223-1130 or jsenney@pselaw.com

Taxpayer Guide to Identity Theft

We are migrating this blog to Facebook and our website. Please visit www.facebook.com/senneysays and "Like" our page. ~Or~ Send your email address to: jsenney@pselaw.com to receive the latest blog by email. Identity theft occurs when someone uses your personal information such as your name, Social Security number (SSN) or other identifying information without your permission.  Often an identity thief uses a legitimate taxpayer’s identity to file a fraudulent tax return and claim a refund.  This generally occurs early in the filing season before the legitimate taxpayer has filed his or her return.  As a result, you and the IRS may be unaware that this has happened until you file your return and discover that two returns have been filed using the same SSN. You should be alert to possible identity theft if you receive an IRS notice that states that:   More than one tax return for you was filed,   You have a balance due, refund offset or have had collection actions taken against you for a year you did not file a tax return, or   IRS records indicate you received wages from an employer unknown to you. If you receive a notice from IRS concerning possible identity theft, you should respond immediately.  If you think someone may have used your SSN fraudulently, notify IRS immediately by responding to the name and number printed on the notice.  You will also need to fill out the IRS Identity Theft Affidavit on Form 14039.  If you are a victim of identity theft and have previously been contacted by the IRS, but have not achieved a satisfactory resolution, you should contact the IRS Identity Protection Specialized Unit at 1-800-908-4490.  Even if your tax records have not currently been affected by identity theft, you should contact the IRS Identity Protection Specialized Unit if you think you might be at risk because your purse or wallet was lost or stolen, or you noticed unusual or questionable credit card activity. You can minimize your chances of being a victim of identity theft by doing the following:   Don’t carry your Social Security card or any document(s) with your SSN on it.   Don’t give a business your SSN just because they ask.  Give it only when required.   Protect your financial information.   Check your credit report every 12 months.   Secure personal information in your home.   Protect your personal computers by using firewalls, anti-spam/virus software, update security    patches, and change passwords for Internet accounts.   Don’t give personal information over the phone, through the mail or on the Internet unless you    have initiated the contact or you are sure you know who you are dealing with.

The IRS does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels.  If you receive a suspicious email, you should report it to the IRS at phishing@irs.gov.  If you receive a suspicious contact by phone, fax or mail, you should call the IRS at 1-800-366-4484.   For more information on identity theft and how to prevent it, click on the following links: IRS.gov/identitytheft and IRS.gov/phishing

If you would like to discuss possible identity theft or how to prevent it, please contact your tax or business attorney at 937-223-1130 or Jsenney@pselaw.com

AND ONE MORE THING.   Identity theft and internet schemes do not only affect tax matters.  Internet crime schemes of all types continue to occur with regularity.  The Federal Trade Commission has issued advice on how to prevent identity theft and internet scams and what to do if it happens.  For more information check out the FTC’s Identity Theft page or use the FTC’s Complaint Assistant Internet Crime Complaint Center.  Please contact us with any questions you may have concerning this at 937-223-1130 or Jsenney@pselaw.com.

SEC Issues Some Rules on Crowd-Funding

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One of the biggest barriers to raising capital from unrelated investors is the ban on general solicitation.  Under this ban, a start-up company is not permitted to make a mass mailing, radio or TV broadcast or email solicitation to reach potential investors.  This ban has made it difficult if not impossible for some start-ups to find the investment dollars necessary to launch their business venture.

In an attempt to jump-start the US economy, Congress passed the JOBS Act in early 2012.  One part of the JOBS Act was a provision mandating the SEC to ease the rules governing how start-ups and small businesses can raise capital from investors.  While the SEC has not rushed to adopt new rules authorizing full-blown crowd-funding, the SEC is moving in that direction and has recently proposed certain exceptions to the ban on general solicitation.

In about 60 days, startups will legally be allowed to advertise, market, and publicly disclose the fact that they are fundraising to accredited investors.  But the use of crowd-funding to solicit and obtain funding from non-accredited investors is not yet permitted.  There is no time table for that phase.  Permitting the use of crowd-funding to solicit funds from non-accredited investors is viewed as more controversial since unsophisticated investors with limited net worth and income could lose their retirement savings by investing in questionable investments.  As the SEC moves forward and develops rules on crowd-funding, we will keep you updated.

If you have any questions about crowd-funding or private placement security offerings please contact me at Jsenney@pselaw.com or 937-223-1130.

AND ONE MORE THING.  We are starting to get inquiries from clients about the effect of same-sex marriages on estate planning, income taxation, asset protection, etc.  If you would like to know more about these matters contact one of our tax or estate planning attorneys at 937-223-1130 or Jsenney@pselaw.com.

If an LLC is Set-up With a Corporate Structure, What Laws Apply?

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Many LLCs are set up with a corporate governance structure.  These LLCs are formed by filing Articles of Organization with the Secretary of State's Office.  These LLCs generally have an operating agreement.  But these LLCs also generally have By-Laws and a Board of Directors and Officers.  So when a question arises concerning governance of the LLC, do you look to ORC chapter 1705 which governs LLCs or do you look to ORC chapter 1701 which governs corporations?  The answer is it depends on whether you added language to the Operating Agreement to say that ORC chapter 1701 applies in certain situations.

An LLC is generally governed under ORC chapter 1705.  This means that if the LLC's operating agreement is silent on a particular issue, then the default provisions of ORC chapter 1705 apply.  But if the LLC's Operating Agreement provides for a different method or procedure for governing the LLC, the method or procedure set forth in the Operating Agreement controls.  As a result, it is possible to have parts of ORC chapter 1701 apply to the LLC by so providing in the LLC operating agreement.

Why would you want ORC chapter 1701 apply?  Well there are some concepts in ORC chapter 1701 that do not exist in ORC chapter 1705.  For example, under ORC section 1701.55, shareholders may cumulate their voting power when voting for directors.  In this way a minority shareholder is able to vote in a director acceptable to the minority shareholder.  Without cumulative voting the majority shareholder is always be able to vote in all the directors.

There is no similar cumulative voting procedure under ORC chapter 1705.   So under ORC chapter 1705,  the majority members can appoint all of the members of the Board of Directors.  To avoid this result, the members could provide in the operating agreement that the cumulative voting procedures of ORC section 1701.55 shall apply to th election of members of the Board of Directors of the LLC.

There are numerous differences in the laws that govern LLCs and corporations.  You need to be sure you understand what laws apply to you.  Contact me at 937-223-1130 or Jsenney@pselaw.com.

AND ONE MORE THING.   The House of Bread was founded with the belief that no one deserves to go hungry.   My wife and I are co-chairs of this year's House of Bread Gala. We invite you to join us for this wonderful event to raise funds and awareness for this organization.  The Gala is being held at the Sinclair Ponitz Center at 6pm on Saturday August 10th.  Hundreds of families count on the House of Bread.  We appreciate all your support.  Register online today!

New Ohio Budget Signed Into Law

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Governor Kasich signed the 2-year $62 billion state budget legislation last Sunday.   The legislation is intended to spur economic growth by reducing personal income taxes.  Under the new budget legislation, personal income taxes are expected to fall $2.6 billion.  The cuts in personal income tax are to be offset by an increase in the state sales tax rate from 5.50 percent to 5.75 percent.  The budget also includes a 50 percent tax break for small-business owners on their first $250,000 of income.  The budget went into effect on Monday.

While taxpayers are generally pleased by the reduction in personal income taxes, some business owners are not so happy with the changes in the state sales tax system.  In addition to increasing the sales tax rate, the new budget legislation also taxes some services that were not previously subject to tax including such varied activities as horse boarding and training; pet grooming; intrastate courier services; marine towing services; packing and crating services; refuse collection; insurance, investment counseling, loan brokerage, property sales agents fees, property management fees, title abstract work, and other financial services; accounting, tax preparation, architecture, engineering, interior design and legal services; hair styling, dating services, funeral services and other personal services; advertising, marketing, public relations and other similar services; computer online sales, software and modifications; admissions to cultural events, sports events and similar entertainment; and certain other labor, fabrication and repair services.  The list of new taxable services is extensive and the scope of some covered services may not be entirely clear.

If you have any questions about the new sales tax provisions or any other part of the new budget legislation please contact one of our tax and business attorneys at 937-223-1130 or Jsenney@pselaw.com.

AND ONE MORE THING.   Employers from time to time face situations where they must investigate an employee suspected of misconduct.  Such investigations frequently involve reviewing employee emails.   But the employer’s legitimate  need to know can run into the employee’s privacy rights.  Can employers be liable if they access an employee’s email account?  Does an employer need to have an email privacy policy in effect?    What happens if the email policy is not enforced consistently?  Does it make any difference if an employee’s email account is provided by the employer?  What if the employee accesses his or her personal gmail account using employer provided computers or Internet connections?   Employers need to know what they can and can’t do in searching employee email accounts.  Please contact one of the business attorneys at PS&E at 937-223-1130 or Jsenney@pselaw.com.